The television revolution will not be televised. It may not even be recorded. More likely, revolutionaries say, it will be streamed wirelessly to whatever mobile device is within arm’s reach, and, perhaps, without any pesky ads. Not only are the televisions themselves doomed to obsolescence, so is the entire traditional apparatus that keeps them afloat. Broadcast studios, overpaid executives and subscription models all included. A pair of private equity firms, GTCR and Spectrum Equity, sees a little more money to be made in the existing television model, however. Quietly, GTCR is building a rural-focused cable and telecommunications platform built on the familiar triple-play model of broadband, video and voice. Rural Broadband Investments, its platform, is looking to scoop up between 300,000 and 400,000 cable subscribers in small to mid-sized markets, subscribers used to paying upwards of $150 per month for their connections to the outside world.
Despite the rise of video streaming and mobile devices, some PE firms still see opportunities with traditional TV companies.
Not everyone is a young, urbanite techie, after all. Not everyone streams TV online, or is even particularly digital. GfK released a report last year that looked at generational television viewing habits for primetime programming (8pm – 9pm). Generation Y viewers have made a fairly significant jump to streaming in the past few years to 12% (effectively from 0%), and pre-recorded viewing increased from 15% in 2008 to 28% in 2012. The percentages go down as age goes up. Generation X viewers who pre-recorded their primetime shows increased from 21% to 26%. The amount that streamed those shows came out to a paltry 3%. The report didn’t look at Baby Boomer viewing habits. Maybe it didn’t need to. On the advertising side, Spectrum Equity made waves this month when Extreme Reach, a portfolio company, purchased Digital Generation’s television advertising business for $485 million. Spectrum, which committed up to $47 million to help finance the deal, went “old school by betting on television advertising,” the Wall Street Journal wrote. Jim Quagliaroli, a managing director with the firm, notes in the piece that the television advertising market is still quite a bit bigger, revenue-wise, than online and mobile platforms. Ten times bigger, by his count. Newer platforms will need time to catch up with the traditional television model in terms of advertising revenues. Focusing on whatever platform is trending, he told the Journal, means possibly missing out on profitable cross-selling opportunities in the meantime. GTCR and Spectrum aren’t necessarily betting against a television revolution. It looks like they’ve recognized opportunities to be had while the transition slowly sets in.